Economists at Rabobank expect the Euro to weaken in the coming months.

A weaker EUR could help support the reforms needed to boost the competitiveness of the EU

Citing sources, Bloomberg News reported on Monday that Bank of Japan (BoJ) officials see little need to abandon the negative interest rate policy (NIRP) this month.

The Japanese central bank hasn’t seen enough evidence of wage growth to justify sustainable inflation, the sources added.

developing story ...

Gold prices fell in India on Monday, according to data from India's Multi Commodity Exchange (MCX).

Gold price stood at 61,379 Indian Rupees (INR) per 10 grams, down INR 817 compared with the INR 62,196 it cost on Friday.

As for futures contracts, Gold prices decreased to INR 61,575 per 10 gms from INR 61,719 per 10 gms.

Prices for Silver futures contracts decreased to INR 72,450 per kg from INR 72,518 per kg.

Global Market Movers: Comex Gold price drifts lower for second day as March Fed rate cut bets recede

• The benchmark 10-year US Treasury yield rebounded from a three-month low after the upbeat US jobs data and lifted the US Dollar, which undermined the Comex Gold price on Friday.
• The US NFP report showed that the economy added 199K new jobs in November, surpassing estimates for a reading of 180K and 150K rise in the previous month.
• The US Bureau of Labor Statistics (BLS) reported that the Unemployment Rate dipped to 3.7% from 3.9% in October, despite a rise in the Labor Force Participation Rate.
• The data pointed to the underlying labor market strength and made traders bet that it could take the Federal Reserve until May 2024 to deliver the first interest rate cut.
• The US troops were targeted with rockets and drones at least five more times on Friday by Iran-backed militias in Iraq and Syria over its support to Israel amid a war in Gaza.
• The US embassy in Iraq's capital Baghdad was shelled on Friday after being attacked by 14 rockets earlier, increasing fears of a broadening conflict in the Middle East.
• Traders now look to this week's US consumer inflation figures and the Fed's interest rate projections for next year before placing aggressive directional bets.
• A rather busy week also features the Swiss National Bank (SNB), the Bank of England (BoE) and the European Central Bank (ECB) monetary policy meetings on Thursday.

(An automation tool was used in creating this post.)

USD/INR remains remarkably stable. Economists at Commerzbank analyze the pair’s outlook.

RBI content with stable rates and currency

FX option expiries for Dec 11 NY cut at 10:00 Eastern Time, via DTCC, can be found below.

- EUR/USD: EUR amounts

• 1.0700 686m
• 1.0720 803m
• 1.0725 609m
• 1.0730 744m
• 1.0800 761m

- USD/JPY: USD amounts                     

• 144.25 456m
• 145.00 568m
• 146.00 951m
• 147.00 1.3b

- USD/CHF: USD amounts        

• 0.8900 412m

- AUD/USD: AUD amounts

• 0.6500 451m
• 0.6550 895m
• 0.6600 627m

• USD/MXN recovers its recent losses as US Dollar stays firm post upbeat US labor data.
• US NFP for November reported an increase of 199,000 jobs, and the US Unemployment Rate fell to 3.7%.
• Banxico is expected to hold cash rates at the level of 11.25%.

USD/MXN attempts to retrace its recent losses, hovering around 17.37 during the Asian session on Monday. The US Dollar (USD) receives upward support from the market sentiment that the Federal Reserve (Fed) won't implement interest rate cuts anytime soon. This sentiment is driven by the resilience displayed in the United States (US) labor market. The US Nonfarm Payrolls for November surpassed expectations with a significant increase of 199,000, and the Unemployment Rate dropped to 3.7% from the previous 3.9%, contributing to the prevailing confidence in the USD.

The latest Headline Inflation in Mexico increased to 0.64% in November from 0.38% in October but fell short of the market expectation of 0.72%. Meanwhile, Core Inflation eased at 0.26% against the 0.30% as expected and 0.39% previously. Additionally, Banxico's upcoming announcement of its key interest rate on Thursday is a notable event that could influence market movements. The prevailing expectation is that Banxico will maintain cash rates at the unchanged level of 11.25%. Investors will likely monitor the central bank's decision and any accompanying statements for insights into the monetary policy outlook.

The Bank of Mexico's (Banxico) officials have recently expressed a leaning towards easing monetary policy. However, dissent emerges within the ranks, notably from Banxico's Deputy Governor Irene Espinosa. She has pushed back, emphasizing that inflationary risks persist and are increasing. This underscores a divergence in perspectives within Banxico regarding the appropriate stance on monetary policy.

The rise in US bond yields, driven by speculations about the Federal Reserve's (Fed) expected rates trajectory higher, is fortifying the US Dollar (USD) and providing considerable support to the Greenback. The US Dollar Index (DXY) remains robust, maintaining a position above 104.00. The yields on 2-year and 10-year US bond coupons stand at 4.75% and 4.25%, respectively, by the press time.

Moreover, Investors are poised to closely watch the US Consumer Price Index (CPI) data for November on Tuesday. Market expects a slight decline from 3.2% to 3.1% in yearly CPI data. However, monthly CPI is anticipated an increase to 0.1%.

Leaving aside the Turkish Lira, the Forint was the notable underperformer among currencies in the central and eastern European region for the past three years. Economists at Commerzbank analyze EUR/HUF outlook.

EUR/HUF on a steady rising path later in 2024 and 2025

Here is what you need to know on Monday, December 11:

Financial markets stay relatively quiet early Monday as investors gear up for highly-anticipated macroeconomic data releases and central bank meetings later in the week. The economic calendar will not offer any high-tier data releases. In the late American session, the outcome of the 10-year US Treasury note auction will be watched closely by participants.

The US Dollar (USD) Index snapped a three-week losing streak as the upbeat November jobs report helped the currency preserve its strength heading into the weekend. Nonfarm Payrolls (NFP) in the US rose by 199,000 and the Unemployment Rate declined to 3.7% from 3.9%, the US Bureau of Labor Statistics reported on Friday. Early Monday, the USD Index holds steady at around 104.00. Meanwhile, the benchmark 10-year US Treasury bond yield continues to fluctuate above 4.2% and US stock index futures trade modestly lower on the day.

The data from China showed that the Consumer Price Index declined by 0.5% on a monthly basis in November, bringing the annual CPI inflation rate down to -0.5% from -0.2% in October.

EUR/USD touched its lowest level in three weeks below 1.0730 on Friday and ended up closing the week in negative territory. Early Monday, the pair consolidates the previous week's losses and trades above 1.0750.

GBP/USD moves up and down in a narrow channel at around 1.2550 to start the new week. On Tuesday, the UK's Office for National Statistics will release labor market figures for October.

After fluctuating wildly in the second half of the previous week on speculations that the Bank of Japan was preparing to move out of negative rates, USD/JPY gained traction and rose above 145.00 early Monday. 

Gold extended its weekly slide on Friday but managed to close slightly above $2,000. XAU/USD struggles to shake off the bearish pressure and tests that key level in the European morning on Monday.

• GBP/USD remains on the defensive around 1.2539 ahead of the FOMC, and BoE rate decision.
• The pair maintains the bearish outlook, holding below the 50- and 100-hour EMA; the RSI indicator stands in the bearish zone below 50.
• 1.2530 acts as an initial level; the immediate resistance level will emerge at 1.2590.

The GBP/USD pair remains under pressure below the mid-1.2500s during the early European session on Monday. Investors are in a cautious mood ahead of the key events in the US and UK this week. The Federal Open Market Committee (FOMC) rate decision on Wednesday and the Bank of England (BoE) rate decision on Thursday will be in the spotlight this week and could trigger volatility in the market. The major pair currently trades near 1.2539, losing 0.07% on the day.

From a technical perspective, GBP/USD maintains a bearish outlook as the pair holds below the 50- and 100-hour Exponential Moving Averages (EMAs) on the four-hour chart. The prevailing bearish sentiment appears in the Relative Strength Index (RSI), which remains below 50, indicating the path of least resistance is to the downside.

The lower limit of the Bollinger Band at 1.2530 acts as an initial level for GBP/USD. The key contention level to watch is a psychological round mark and a low of December 8 at 1.2500. Any follow-through selling will see a drop to a low of November 22 at 1.2450. Finally, the additional downside filter is a low of November 17 at 1.2374.

On the upside, the immediate resistance level will emerge at the 50-hour EMA at 1.2590. The next hurdle is seen at the upper boundary of the Bollinger Band at 1.2608. A break above the latter will see a rally to a high of December 5 at 1.2652, en route to a high of December 4 at 1.2712.

GBP/USD four-hour chart

• USD/CNH gains ground near 7.1960 on the cautious mood and downbeat Chinese data.
• The pair holds above the 50- and 100-hour EMA; RSI indicator stands in the overbought condition.
• The immediate resistance level is seen at 7.2100; 7.1776 acts as an initial support level for the pair.

The USD/CNH pair holds positive ground around 7.1960 during the Asian session on Monday. The cautious mood in the market and the weaker-than-expected Chinese data lends some support to the pair. Investors await the US inflation data due on Tuesday ahead of the Federal Open Market Committee (FOMC) rate decision on Wednesday for fresh impetus. The markets anticipate the US central bank to hold the rate steady at its December meeting.

Furthermore, the National Bureau of Statistics of China revealed on Saturday that China’s Consumer Price Index (CPI) dropped 0.5% YoY in November from October’s reading 0.2% decline. This figure came in worse than the expectation of a 0.2% decrease. Meanwhile, the nation’s Producer Price Index (PPI) fell 3.0% YoY in November versus a 2.6% decline prior, below the market consensus of a 2.8% decline in the same month.

According to the daily chart, USD/CNH holds above the 50- and 100-hour Exponential Moving Averages (EMAs), which means the path of least resistance for the pair is to the upside. The upward momentum is supported by the Relative Strength Index (RSI), which stands in bullish territory above 50. However, the overbought condition indicates that further consolidation cannot be ruled out before positioning for any near-term USD/CNH appreciation.

The immediate resistance level for USD/CNH is seen near a low of November 17 at 7.2100. Further north, the next upside barrier is located at a high of November 20 at 7.2248, en route to a low of November 15 at 7.2384, and finally a low of November 16 at 7.2427.

On the flip side, the 100-hour EMA at 7.1776 acts as an initial support level for the pair. A break below the latter will see a drop to the 50-hour EMA at 7.1662. The additional downside filter to watch is the lower limit of the Bollinger Band at 7.1503, followed by a low of November 28 at 7.1424.

USD/CNH daily chart

• USD/CHF moves sideways near the psychological level ahead of US inflation.
• Fed is expected to maintain interest rates at 5.5% during the policy meeting on Wednesday.
• Market expects the Fed to keep monetary policy tightened for a longer period as the labor market showed resistance.
• SNB is predicted to maintain policy rates at 1.75% in its upcoming meeting on Thursday.

USD/CHF hovers around 0.8800 during the Asian trading hours on Monday, grappling to extend its profits for the third successive session. The USD/CHF pair has been on an upward trajectory, propelled by positive employment data from the United States (US). The rise in US bond yields, driven by speculations about the Federal Reserve's (Fed) rates trajectory, is further strengthening the US Dollar (USD) and providing support to the USD/CHF pair.

The US Nonfarm Payrolls for November exceeded expectations with a substantial increase of 199,000, and the Unemployment Rate declined to 3.7% from the previous 3.9%. Additionally, the preliminary Michigan Consumer Sentiment Index for December showed a noteworthy rise, reaching 69.4, marking a significant increase from the previous reading of 61.3.

However, the consensus is that the Federal Reserve (Fed) will maintain interest rates at 5.5% during the upcoming monetary policy meeting on Wednesday. However, solid labor market conditions could put pressure on the Fed to maintain higher interest rates for a longer period. Investors are anticipated to closely scrutinize the US Consumer Price Index (CPI) data on Tuesday, anticipating potential market impacts.

On the Swiss front, the CHF experienced downward pressure following the release of seasonally adjusted Unemployment Rate data by the State Secretariat for Economic Affairs (SECO) last week. The report revealed that the total number of unemployed civilian laborers in November remained steady at 2.1%, consistent with previous figures.

Furthermore, the easing of the Swiss Consumer Price Index (YoY) for November at 1.4%, compared to the prior 1.7%, contributed to the depreciation of the Swiss Franc (CHF). The upcoming interest rate decision by the Swiss National Bank (SNB) on Thursday is expected to see the central bank maintaining policy rates at the unchanged level of 1.75%.

• Gold price remains under some selling pressure for the second successive day on Monday.
• Reduced bets for a March Fed rate cut move and a modest USD uptick weigh on the metal.
• Geopolitical risks could help limit further losses ahead of this week’s key data/event risks.

Gold price (XAU/USD) fell over 1.5% intraday and touched a two-week trough on Friday following the release of stronger-than-expected employment details from the United States (US). The closely-watched US jobs report showed strength across the board and pointed to a resilient economy, forcing investors to trim their bets for a 25 basis points (bps) interest rate cut by the Federal Reserve (Fed) in March 2024. This pushed the US Treasury bond yields and the US Dollar (USD) higher, which, in turn, weighed heavily on the commodity.

The selling bias around the Gold price remains unabated through the Asian session on Monday, though it lacks follow-through amid geopolitical risks. Traders also seem reluctant to place aggressive bets ahead of this week's key data and central bank event risks. The US consumer inflation figures are due on Tuesday, which will be followed by the crucial FOMC decision on Wednesday. The Swiss National Bank (SNB), the Bank of England (BoE) and the European Central Bank (ECB) are also scheduled to announce policy updates on Thursday.

The market attention will then turn to the release of flash PMI prints from the Eurozone, the UK and the US, which will offer fresh insight into the health of the global economy and provide some meaningful impetus to the Gold price. Nevertheless, the XAU/USD, for now, seems to have found acceptance below the $2,000 psychological mark and looks to a possible Fed pivot to prevent a deeper correction.

Daily Digest Market Movers: Gold price continues to be weighed down by reduced bets for a rate cut by the Fed in March 2024

• The benchmark 10-year US Treasury yield rebounded from a three-month low after the upbeat US jobs data and lifted the US Dollar, which undermined the Gold price on Friday.
• The US NFP report showed that the economy added 199K new jobs in November, surpassing estimates for a reading of 180K and 150K rise in the previous month.
• The US Bureau of Labor Statistics (BLS) reported that the Unemployment Rate dipped to 3.7% from 3.9% in October, despite a rise in the Labor Force Participation Rate.
• The data pointed to the underlying labour market strength and made traders bet that it could take the Federal Reserve until May 2024 to deliver the first interest rate cut.
• The US troops were targeted with rockets and drones at least five more times on Friday by Iran-backed militias in Iraq and Syria over its support to Israel amid a war in Gaza.
• The US embassy in Iraq's capital Baghdad was shelled on Friday after being attacked by 14 rockets earlier, increasing fears of a broadening conflict in the Middle East.
• Traders now look to this week's US consumer inflation figures and the Fed's interest rate projections for next year before placing aggressive directional bets.
• A rather busy week also features the Swiss National Bank (SNB), the Bank of England (BoE) and the European Central Bank (ECB) monetary policy meetings on Thursday.

Technical Analysis: Gold price seems vulnerable to slide further towards testing the 50-day SMA support near the $1,950 area

From a technical perspective, Friday's breakdown below the $2,012-2,010 area, representing the 61.8% Fibonacci retracement level of the November-December rally, could be seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart have been losing positive traction, which, in turn, supports prospects for deeper losses. Hence, a subsequent slide towards testing the 50-day Simple Moving Average (SMA), currently pegged around the $1,965-1,963 zone, looks like a distinct possibility. This is followed by the very important 200-day SMA, near the $1,951-1,950 region, which if broken decisively will set the stage for an extension of the recent sharp pullback from an all-time high touched last Monday.

On the flip side, the $2,010-2,012 support breakpoint now seems to act as an immediate hurdle ahead of the $2,030 level and the $2,040 supply zone. Against the backdrop of the occurrence of a golden cross, with the 50-day rising above the 200-day SMA, some follow-through buying will shift the near-term bias in favor of bullish traders. The Gold price might then climb to the next relevant resistance near the $2,071-2,072 region before aiming to reclaim the $2,100 round figure.

• EUR/USD rebounded from its three-week low at 1.0723.
• ECB is expected to keep the Main Refinancing Operations Rate unchanged at 4.5% in its upcoming meeting.
• Fed may maintain interest rates at 5.5% during the policy meeting on Wednesday.
• Solid US labor data triggered the discussion on the duration of tightened monetary policy by the Fed.

The EUR/USD rebounds from its three-week low at 1.0723, which was recorded on Friday. The EUR/USD pair trades higher around 1.0760 during the Asian trading hours on Monday. However, the US Dollar (USD) received an upward momentum after the release of stronger economic data from the United States (US).

The US Nonfarm Payrolls for November exceeded expectations with a significant increase to 199,000, while the US Unemployment Rate dropped to 3.7% from the previous 3.9%. Meanwhile, the German Harmonized Index of Consumer Prices (YoY) remained steady at 2.3% in November, in line with expectations, with monthly figures reflecting a 0.7% decline, similar to October.

Market anticipation suggests that the European Central Bank (ECB) will maintain the Main Refinancing Operations Rate at 4.5% in its upcoming monetary policy statement on Thursday. Furthermore, expectations point toward a commencement of interest rate cuts by the ECB in March 2024.

On the other hand, speculation surrounds the future trajectory of the US Federal Reserve's (Fed) interest rates and the duration for which policy rates will remain restrictive. However, the consensus expectation is that the Fed will keep interest rates at 5.5% during the upcoming monetary policy meeting on Wednesday.

The US Dollar Index (DXY) remains strong above 104.00, supported by positive US Treasury yields. At present, the yields on 2-year and 10-year US bond coupons stand at 4.24% and 4.73%, respectively.

Investors are expected to closely monitor the US Consumer Price Index (CPI) data on Tuesday for potential market impact. Additionally, the ZEW Survey – Economic Sentiment for December will be released by Germany, adding to the market's focus.

• Indian Rupee remains relatively quiet ahead of the FOMC meeting.
• The Reserve Bank of India (RBI) MPC decided to keep the rate steady at 6.50% at its December meeting.
• Investors will closely monitor the US inflation data ahead of the FOMC interest rate decision.

Indian Rupee (INR) trades flat with mild losses on Monday as traders prefer to wait on the sidelines ahead of the key US event. On Friday, the Reserve Bank of India (RBI) Monetary Policy Committee (MPC) decided to keep the interest rate unchanged at 6.50% while raising its growth forecast for the current fiscal year to 7% from 6.5% earlier. RBI’s Das said easing inflation across all components of retail inflation is one of the reasons behind the MPC's decision to keep the repo rate unchanged.

RBI’s Das further stated that the near-term picture is clouded by risks to food inflation, which might lead to higher inflation in November and possibly December. This should be monitored for potential second-round effects.

Investors will closely monitor the US inflation data, as measured by Consumer Price Index (CPI). The attention will shift to the Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday. In the meantime, RBI could support the Indian Rupee at 83.40 as oil companies and others would buy on dips in USD/INR.

Daily Digest Market Movers: The Indian Rupee remains resilient to external shocks amid better macro data, sustainable forex reserves, and investor inflows

• The Reserve Bank of India (RBI) governor Shaktikanta Das announced the Monetary Policy Committee decided unanimously to keep the policy repo rate unchanged at 6.5% and keep the focus on the withdrawal of accommodation.
• Das highlighted the Indian economy is resilient and has momentum, as reflected in the GDP growth for the second quarter of the ongoing financial year.
• Indian retail inflation is estimated at 5.4% in FY24. RBI also projected retail inflation in Q3 of FY24 at 5.6% and 5.2% in Q4.
• The forecast growth rate for India's GDP in FY24 is currently set at 7.0%, with growth rates forecast of 6.5% and 6.0% for the third and fourth quarters, respectively.
• India's foreign exchange reserves increased to $604 billion as of December 1, surpassing the $600 billion mark after a gap of about four months.
• US Nonfarm Payrolls (NFP) rose by 199K from October's increase of 150K and came in above the market expectation of 180K.
• Unemployment Rate declined to 3.7% from 3.9% in the same period, while Average Hourly Earnings remained steady at 4.0%, in line with the market expectation.
• The preliminary University of Michigan Consumer Sentiment Index for December arrived at 69.4 from 61.3 in the previous reading, the second-highest reading this year.

Technical Analysis: Indian Rupee trades flat with a slight positive bias

Indian Rupee trades flat on the day. The USD/INR pair has traded near the upper boundary of a trading range of 82.80–83.40 since September. According to the daily chart, USD/INR maintains its bullish vibes as it holds above the key 100-day Exponential Moving Average (EMA). Additionally, the 14-day Relative Strength Index (RSI) continues above the 50.0 threshold, bolstering the upward momentum.

That being said, a decisive break above the upper boundary of the trading range of 83.40 could pave the way to the next hurdle at the year-to-date (YTD) high of 83.47, followed by a round figure of 84.00. On the downside, the critical support level is seen at the 83.00 psychological round figure. A break below 83.00 will see a drop to 82.80, representing the confluence of the lower limit of the trading range and a low of September 12. The additional downside to watch is a low of August 11 at 82.60.

• NZD/USD trades lower around 0.6120 as US Dollar remains firm.
• Stronger US NFP data contributed support to underpinning the Greenback.
• US Fed is expected to maintain the cash rate at 5.5% in December's meeting.
• New Zealand’s GDP data for Q3 is expected to decline from the previous quarter’s growth.

NZD/USD extends its losses for the second consecutive trading session, bidding around 0.6120 during the Asian hours on Monday. The robust employment data has sparked an upward movement in US bond yields, contributing to the strengthening of the US Dollar (USD) and consequently exerting pressure on the Kiwi pair.

The US Nonfarm Payrolls for November showed a significant uptick, reaching 199,000 compared to October's increase of 150,000, surpassing the market expectation of 180,000. The US Average Hourly Earnings (Year-on-Year) remained stable at 4.0%, aligning with market projections for November. Furthermore, the Unemployment Rate dropped to 3.7%, down from the previous 3.9%. Additionally, the preliminary Michigan Consumer Sentiment Index for December rose to 69.4, marking a notable increase from the previous reading of 61.3.

US Dollar Index (DXY) attempts to gain ground for another session, trading above 104.00 at the time of writing. The yields on 2-year and 10-year US bond coupons stand at 4.24% and 4.73%, respectively.

Market participants speculate regarding the future trajectory of the US Federal Reserve's (Fed) monetary policy and how long the central bank plans to maintain rates at restrictive levels. However, the consensus expectation is that the Fed will maintain interest rates at 5.5% during the upcoming monetary policy meeting on Wednesday.

Investors will closely watch the US Consumer Price Index (CPI) data on Tuesday for additional insights and its potential impact on the market. Turning attention to the Kiwi's economic agenda, the Gross Domestic Product (GDP) data for the third quarter is scheduled for release on Thursday. Projections suggest a growth of 0.2%, a decline from the previous quarter's 0.9% expansion.

• WTI Oil prices ticks higher during the Asian session on Monday, though lacks follow-through.
• Signs of a resilient US economy fuel optimism over the demand outlook and lend support.
• China’s economic woes might cap any further gains ahead of the key central bank event risks.

West Texas Intermediate (WTI) Crude Oil prices edge higher during the Asian session on Monday and look to build on last week's modest recovery from the $69.00/barrel mark or the lowest level since June 29. The commodity currently trades just above the mid-$71.00s, up over 0.35% for the day, though lacks follow-through amid a combination of diverging forces.

The strong US Nonfarm Payrolls (NFP) data released on Friday pointed to a still resilient economy and prompted some optimism over the outlook for crude demand in the world's largest fuel consumer. This, in turn, is seen as a key factor acting as a tailwind for Crude Oil prices. Investors, however, remain sceptical that the recent production cuts announced by OPEC+ will be enough to offset rising supply from countries outside the cartel and waning global demand. This, along with weak economic data from top importer China, raises concerns over fuel demand and should cap any meaningful appreciating move for the black liquid.

In fact, China's General Administration of Customs reported on Friday that crude imports fell 10% from October to a four-month low in November. Furthermore, inflation data from China released over the weekend revealed that consumer prices last month recorded the fastest drop since November 2020. Adding to this, the Producer Price Index (PPI) marked the 14th straight month of decline. The data was seen as a reflection of weak consumer demand, warranting caution before placing aggressive bullish bets around Crude Oil prices. Traders might also prefer to wait on the sidelines ahead of this week's key central bank event risks.

Technical levels to watch

• USD/CAD seems to surpass the psychological level at 1.3600.
• Upbeat WTI price could provide support for the Canadian Dollar (CAD).
• Stronger US labor data have triggered discussions on the trajectory of Fed monetary policy.

USD/CAD recovers its recent losses as the US Dollar (USD) attempts to gain ground for the second successive day. The USD/CAD pair trades higher around 1.3600 during the Asian session on Monday. However, the stronger Crude oil prices could limit the losses of the Canadian Dollar (CAD).

West Texas Intermediate (WTI) extends its winning streak for the third successive session, trading higher near $71.60 per barrel during the Asian session on Monday. Crude oil prices experienced an upswing following the release of data last week, indicating a degree of resilience in the United States (US) economy. The robust US employment data on Friday played a significant role, portraying the labor market as one of the few positive aspects in the world's largest fuel consumer.

The US Nonfarm Payrolls for November exhibited a notable increase, reaching 199,000 compared to October's rise of 150,000 and surpassing the market expectation of 180,000. The US Average Hourly Earnings (YoY) remained constant at 4.0%, in line with the market's projections for November. The Unemployment Rate decreased to 3.7%, down from the previous 3.9%.

The robust employment data has stirred conversations regarding the future trajectory of the US Federal Reserve's (Fed) monetary policy and how long the central bank plans to maintain rates at restrictive levels. This surge in discussions has fueled an upward movement in US Treasury yields, contributing to the strengthening of the USD. Market participants are now focused on the US Consumer Price Index (CPI) on Tuesday and the Fed Interest Rate Decision on Wednesday for further insights and potential market impact.

• The Japanese Yen gives up some of its recent strong gains against the US Dollar.
• Reduced bets for an imminent shift in the BoJ’s policy shift undermine the JPY.
• The USD draws support from Friday’s better-than-expected US monthly job data.
• The market attention now shifts to the US CPI and the FOMC decision this week.

The Japanese Yen (JPY) kicks off the new week on a softer note amid reports that Bank of Japan (BoJ) Governor Kazuo Ueda's comments last week were taken out of context and not meant to signal anything about the timing of a policy change. Adding to this, the weaker GDP report pointed to Japan's still fragile economy, suggesting that market expectations of an imminent rate hike may be overblown. In contrast, stronger monthly employment figures from the United States (USD) made traders bet that it could take the Federal Reserve (Fed) until May to begin a series of interest-rate cuts next year. This, in turn, lends some support to the US Dollar (USD) allowing the USD/JPY pair to build on Friday's goodish recovery from mid-142.00s and gain positive traction for the second successive day on Monday.

Investors, meanwhile, seem convinced that the end to BoJ's decades of super-low interest rates may be nearing. This, along with concerns about a deeper global economic downturn, might continue to benefit the JPY's relative safe-haven status and cap any meaningful appreciating move for the USD/JPY pair. Traders might also refrain from placing aggressive directional bets ahead of this week's key data/event risks. The latest US consumer inflation figures are due for release on Tuesday and will be followed by the crucial FOMC monetary policy decision on Thursday. This would play a key role in influencing the near-term USD price dynamics and provide some meaningful impetus to the major. Hence, it will be prudent to wait for strong follow-through buying before confirming that spot prices have bottomed out.

Daily Digest Market Movers: Japanese Yen continues losing traction amid hopes that BoJ will delay exit from easy policy

• A Reuters report, citing three sources familiar with the matter, said that Bank of Japan Governor Kazuo Ueda's comments last week were not meant to signal an imminent policy shift.
• This, along with data showing that Japan's economy contracted more sharply than first estimated in the third quarter, by an annualized 2.9%, is seen undermining the Japanese Yen.
• The US Bureau of Labor Statistics (BLS) reported on Friday that the economy added 199K new jobs in November as compared to the 150K in the previous month and 180K anticipated.
• Additional details of the publication revealed that the Unemployment Rate declined to 3.7% from 3.9% in October, despite a rise in the Labor Force Participation Rate to 62.8% from 62.7%.
• Annual wage inflation, as measured by the change in Average Hourly Earnings, matched consensus estimates and held steady at 4% during the reported month.
• The upbeat US employment figures forced investors to scale back their expectations for an early interest rate cut by the Federal Reserve, as early as March 2024.
• Investors now look forward to the latest US consumer inflation figures on Tuesday, which could influence market expectations about a series of Fed rate cuts next year.
• The US central bank is also scheduled to announce its policy decision at the end of a two-day policy meeting on Wednesday and is anticipated to maintain the status quo.
• The market focus, meanwhile, will be on the so-called "dot plots" and Fed Chair Jerome Powell's comments at the post-meeting press conference.

Technical Analysis: USD/JPY recovers further from the multi-month low touched last Thursday, upside potential seems limited

From a technical perspective, the USD/JPY pair last week showed some resilience below the very important 200-day Simple Moving Average (SMA). The subsequent move beyond the 23.6% Fibonacci retracement level of the recent decline from the 152.00 neighbourhood, or the YTD peak, favours bullish traders. The momentum, however, paused ahead of the 38.2% Fibo. level during the Asian session on Monday, which if cleared should allow spot prices to reclaim the 146.00 mark. The momentum could get extended further, though is more likely to remain capped near the 50% Fibo. level, around the 146.80 region. 

Meanwhile, oscillators on the daily chart are holding deep in the negative territory and support prospects for the emergence of some selling at higher levels. That said, the 145.00 psychological mark might now protect the immediate downside ahead of the 144.55-144.50 area, or the 50% Fibo. level and the 144.00 round figure. Failure to defend the said support levels could make the USD/JPY pair vulnerable to accelerate the slide further towards retesting sub-143.00 levels, or the 61.8% Fibo. level. This is followed by the 200-day SMA, currently around the 142.35 region, the 142.00 mark and the 141.60 region, or the multi-month low touched last Thursday. Some follow-through selling below the latter will be seen as a fresh trigger for bearish traders and pave the way for a further near-term depreciating move for the USD/JPY pair.

• GBP/USD recovers some lost ground near 1.2550 on the consolidation of the US Dollar.
• The US Nonfarm Payrolls beat the market expectations in November, adding 199K new jobs to the US economy.
• The BoE is likely to keep borrowing costs at a 15-year high at its December meeting on Thursday.
• Investors will focus on the UK employment data and US inflation data, due on Tuesday.

The GBP/USD pair holds positive ground during the early Asian session on Monday. The pair recovers some lost ground from Friday’s low of 1.2500 and currently trades around 1.2551, gaining 0.03% on the day. The US Nonfarm Payrolls came in better than market expectations. Traders await the key events from the FOMC and BoE meeting this week and these events could trigger volatility in the market.

The Bank of England (BoE) governor Andrew Bailey said last month it was far too early to be thinking about rate cuts while warning there was “no room for complacency” on inflation despite a fall in the Consumer Price Index from 6.7% in September to 4.6% in October. The BoE is likely to keep borrowing costs at a 15-year high at its December meeting on Thursday.


The US Nonfarm Payrolls beat market expectations in November, adding 199K new jobs in the US economy from October’s print of 150K payroll additions. Furthermore, the Unemployment Rate declined to 3.7% from 3.9% while the Average hourly earnings remained unchanged at 4.0% YoY.

Last week, US Federal Reserve (Fed) Chair Jerome Powell said earlier this month that it would be premature to conclude with confidence that the Fed had achieved a sufficiently restrictive stance to tame inflation. Powell added that we are prepared to tighten policy further if it becomes appropriate to do so. Nonetheless, investors speculated that the upbeat US Nonfarm Payrolls (NFP) report may convince the Federal Reserve (Fed) to delay rate cutting in 2024.

Market players will keep an eye on the UK employment data, including Employment Change, Claimant Count Change, and ILO Unemployment Rate, due on Tuesday. Also, the US inflation data, as measured by the US Consumer Price Index (CPI) will be released later on Tuesday. The focus will shift to the US FOMC meeting on Wednesday and the BoE policy meeting on Thursday.

• Australian Dollar continues to move downward on the firm US Dollar.
• Australia’s chief policymaker Michele Bullock will deliver a speech on Tuesday.
• China's CPI declined by 0.5% in November both monthly and yearly.
• US NFP rose by 199,000 in November against the previous rise of 150,000.

The Australian Dollar (AUD) seems to extend its losses on Monday. The robust employment figures in the United States (US) bolstered the Greenback on Friday, exerting downward pressure on the AUD/USD pair. Furthermore, worries about deflation in China, coupled with a Consumer Price Index (CPI) and Producer Price Index (PPI) that fell short of expectations, contributed to a selling spree on the Australian Dollar (AUD).

Australia’s chief policymaker Michele Bullock, the Governor of the Reserve Bank of Australia (RBA), is scheduled to deliver a speech on Tuesday. The RBA opted to maintain the cash rate at 4.35% at its December meeting. While the RBA maintains a tightening bias, recent economic indicators suggest a likelihood of no further rate hikes in the near future.

US Bureau of Labor Statistics (BLS) revealed on Friday that November's US Nonfarm Payrolls (NFP) exceeded market forecasts. Simultaneously, the Unemployment Rate saw a decline during the same period. Consequently, there has been an upward surge in US Treasury yields, supporting the strengthening of the USD.

The stronger employment data have ignited discussions and speculations about the forthcoming path of the US Federal Reserve's (Fed) monetary policy and the duration for which the central bank intends to uphold rates at restrictive levels. The attention will be on the US Consumer Price Index (CPI) on Tuesday and the Fed Interest Rate Decision on Wednesday.

Daily Digest Market Movers: Australian Dollar moves downward on a negative bias

• China's Consumer Price Index (CPI) experienced a year-on-year decline of 0.5% in November, compared to a 0.2% decrease in October. On a monthly basis, Chinese inflation fell by 0.5%, surpassing the 0.1% decline observed in October.
• China's Producer Price Index (PPI) recorded a 3.0% year-on-year drop in November, reflecting a more substantial decline than the 2.6% decrease reported in October.
• US Nonfarm Payrolls for November rose by 199,000 against the previous rise of 150,000 in October and the market expectation of 180,000.
• US Average Hourly Earnings (Year-on-Year) held steady at 4.0%, aligning with market projections for November. Meanwhile, the Unemployment Rate dropped to 3.7% from the previous 3.9%.
• The preliminary Michigan Consumer Sentiment Index for December reached 69.4, a notable increase from the previous reading of 61.3.

Technical Analysis: Australian Dollar looks to reach the major level at 0.6550

The Australian Dollar trades lower around 0.6570 on Monday. The 21-day Exponential Moving Average (EMA) at 0.6553 could act as a key support, which is lined up with the major level at 0.6550. A break below the support region could put weight on the AUD/USD pair to navigate the area around 38.2% Fibonacci retracement at 0.6526 level. On the upside, the psychological level at 0.6600 would likely serve as a potential barrier.

AUD/USD: Daily Chart

On Monday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1163 as compared to Friday's fix of 7.1123 and  7.1690 Reuters estimates.

• EUR/USD holds ground near 1.0770, up 0.06% on the day.
• The US labour market  may convince the Federal Reserve (Fed) to delay rate cuts in 2024.
• The market expected the European Central Bank (ECB) to hold rates until the inflation will return to target in a timely manner.
• Traders will monitor US inflation data ahead of the FOMC, ECB monetary policy meeting.